Insights 
VT 
Australia’s S&P Global Composite PMI fell to 52.1 in October from 52.6 in the previous month. This decline reflects a shift in the economic activity for the country.
On the currency front, USD/CAD reached seven-month highs above 1.4100, impacted by lower crude oil prices. Meanwhile, WTI crude oil prices slid to near $60.00 due to rising US inventories.
Gold And Cryptocurrency Struggles
Gold experienced a descent below $3,850, struggling amidst a strong US Dollar but cushioned by weaker US Treasury bond yields. Additionally, the cryptocurrency market faced turbulence as Bitcoin fell below $100,000, erasing $2 billion in total liquidations.
Decentralized exchange Balancer was targeted in a hack leading to $120 million in losses. The platform confirmed the inability to halt the breach, affecting older pools.
Meanwhile, the response of central banks, including the European Central Bank, remains a focal point for currency movements. The Euro benefitted as traders anticipated a cautious ECB policy approach, causing EUR/USD to recover to around 1.1490.
GBP/USD continued its downward trajectory, significantly impacting the Pound Sterling’s position over 12 consecutive trading sessions. This drop brought the currency to a new low, straining its performance against the US Dollar.
Australia Economic Slowdown
With Australia’s composite PMI slowing to 52.1, we’re seeing signs of a cooling economy even while it remains in expansion territory. This mirrors the broad slowdown we saw across developed economies back in late 2023, suggesting that growth is becoming more fragile. Given Australia’s link to China’s economy, this slowdown puts downward pressure on the Australian dollar.
The US dollar continues to show broad strength, and we should position for this to continue in the near term. The Dollar Index (DXY) has been holding firm above 106 since the Federal Reserve’s hawkish pause in their October 2025 meeting, signaling little appetite for rate cuts. This strength is evident as USD/CAD pushes seven-month highs and the pound breaks below 1.3100.
Weakness in crude oil is reinforcing the move in currency markets, especially for commodity-linked currencies. With WTI prices now struggling to hold near $60 a barrel, a recent surprise build in US inventories of 3.6 million barrels last week suggests supply is outpacing demand. This creates a challenging environment for currencies like the Canadian dollar.
Considering these factors, maintaining a short position on the AUD/USD seems prudent, especially as it lingers near 0.6450. China’s cautious economic signals, including the PBOC setting a weaker reference rate for the yuan, will continue to act as a headwind for the Aussie. We see little reason for this trend to reverse in the coming weeks.
The sharp decline in the British pound also warrants attention, as it is accelerating its losses against the dollar. This type of one-sided momentum, reminiscent of the volatility following the UK’s mini-budget crisis back in 2022, suggests traders should be cautious about trying to catch a bottom. Options strategies that benefit from further declines or high volatility could be effective.
Gold is caught between a strong US dollar and underlying risk aversion from factors like a potential US government shutdown. While the stronger dollar typically caps gold’s price, safe-haven buying could provide a floor, keeping it range-bound. We should consider using straddles or strangles to trade the potential for a breakout in either direction rather than a simple directional bet.
